With the news of ‘normality’ on the horizon, unfortunately, this is unlikely to be as pronounced for the manufacturing supply chains. There is always a lag between event and outcome, but here in the electronic and electro-mechanical world, we have mountains to climb before we are able to breathe a sigh of relief – there is however, light at the end of the tunnel.
Capacity and lead-time issues
There are significant disruptions with all electronic and electrical component supply chains, lead-times have been and will continue to extend. Unfortunately, they are not product, series, or manufacturer specific, so the best way to mitigate is give full visibility to your EMS partners and allow them to manage and leverage the supply chain effectively.
Foundries are at full capacity and are having issues with wafer availability. These foundries overall have no plans to expand capacity, and it is impacting foundries such as Taiwan Semiconductor Manufacturing Company who are operating supplying fabs for their own lines, as well as fabless manufacturers such as Qualcomm.
Manufacturers seeing issues with capacity include ADI, Texas Instruments, Vishay, NXP, ST Micro, Molex, JST, Microchip, Murata, AVX, Yageo and others. This is a ‘perfect storm’ of COVID constraints, reduce capacity, reduced output, uptake in demand from the Far East, global 5G and EV initiatives, IOT, distance/remote working and learning, border delays and closures as well as slow moving freight due to increases costs and lack of means to transport goods.
Shortages at paper mills are increasing paper and cardboard pricing, with corrugated card being particularly impacted by increased lead-times and prices (5% price increase, 8 week lead-time)
TE Connectivity are struggling still with allocation on relays (52 weeks), this has been ongoing for at least 12 months, and is showing no signs of improvement yet.
Lead-times of Vishay IHLP are continuing to show as 70 weeks plus, no improvement has been seen for a number of consecutive quarters.
Broadcom lead-times are now 50 weeks; it is worth securing stock and forward ordering for at least Q1 and Q2. However, over-securing will lead to allocation, so as always – ensure you are communicating your demand with your supply chain partners to ensure appropriate order coverage and supply chain stability.
Manufacturer Mergers/Acquisitions
The planned acquisition of ARM by NVIDIA is being investigated by the Competition and Markets Authority with potential approval not being given for around 18 months whilst investigations are ongoing.
Diodes Inc completed its acquisition of Lite-On Semiconductor at the end of last year, with the deal reportedly being worth $446million in cash.
PCB Technology
Chinese New Year is just around the corner, fuelling increased peak season surcharges for freight with extended lead-times due to factory shutdowns, global freight situation and reduction in movement.
Reports of shortages of laminate /FR4, as always, ensure all orders are placed as early as possible to secure materials, production slots, freight and pricing.
Copper pricing is volatile and has increased, this can impact PCB pricing as it is a key component in bare boards.
Pricing Uncertainty
Pricing is still volatile, with last minute manufacturer increases across the product range – some are significant, and unfortunately are global.
5% on cardboard from 1st Feb 2021
Microchip price increases from 15th January 2021
AVX price increases overall.
NXP significant raises throughout 2021 on all products
Xilinx increases for Spartan 6, Kintex 7 and Virtex 6&7 from April 2021
January and February 2021 increases for Bussmann, TE, Burket, HMS, P+F, ABB, Wago.
SiliLabs and Cypress increases expected between 10%-20%.
STM 5% from 1st January 2021.
Manufacturer price increases are to be expected to continue throughout this year without warning, especially for items that have lower global demand, are considered legacy product or have raw material increases/shortages, for example Silicon.
Global Economy
Oil pricing has slowly climbed over the last quarter, with crude pricing at $55.92 per barrel at time of writing.
Gold – pricing has been fluctuating, but the average change over the last 3 months is still on 2%, however visible peaks in the market have been seen.
Silver – price seems to be fairly stable once again with just a 1% change over the last quarter, current price is £18.49 per ounce.
Copper pricing has increased by a huge 17.5% over the last 3 months and will impact cable, wire, PCB’s etc.
Steel rebar is now $634 per tone, upon last publication pricing was significantly lower in October with pricing $446 per tone.